An organization or business functions by performing a set of activities which enable it to operate and attempt to achieve specific goals. These activities, or processes, generally involve a number of steps and may be intended to provide services, manufacture and sell products, or implement particular policies. However, most organizations are unable to successfully allocate their resources so as to maximize the potential of the organization, whether this potential is expressed in terms of profits, customer satisfaction, business volume, or some other measure. One way to carry out this maximizing process would be to determine a set of quality or performance measures for the processes which occur within an organization, and then optimizing those measures. If the quality measures chosen can be correlated with the characteristics of the organization which are desired to be maximized, i.e., the profits, customer satisfaction, etc., then optimizing the quality measures would lead to an improvement in the operation of the organization. However, this approach is not followed by most organizations.
If an internal activity of an organization is expressed as a process which undergoes multiple cycles, then it is generally desired that the outcome of each cycle of the process be the same within specified limits. This is because the reproducibility of the process provides a degree of consistency with respect to the operation of the organization, and this consistency provides a base line for evaluating the organization and improving other features.
Improvements to the quality of a repetitive process are suggested when significant variation exists in the outcome of each cycle of the process. Hence, reducing the variation in the outcome of a process is one indication of an improvement in its overall quality. Determining the elements of a process, and the relationship between their respective inputs and outputs, assists in reducing the variation in the outcome of the process by identifying those aspects which can be modified to make the process more reproducible. This analysis of a process also assists in determining how best to allocate resources to improve the performance measures of the process and the organization as a whole.
Modern Quality Improvement (QI) techniques and methods were first developed during the 1920's by employees of Western Electric who were concerned with reducing the variation in the output of a manufacturing plant. In order to achieve this goal, techniques were developed which became known as Statistical Process Control (SPC). SPC is a tool for measuring the variation in the outcomes of repetitive processes. Employees measured the output of a process using SPC techniques, altered the steps of the process, and then repeated the output measurement. By adjusting the process parameters so as to reduce variation in the outcome, the quality of the process was improved.
SPC techniques can be extended and applied to all areas of an organization, from product design through manufacturing, and including sales and customer relations. The broad application of SPC techniques in this manner is termed Total Quality Control. Thus, using techniques such as SPC, efforts towards quality improvement have been extended to all phases of an organization's operation, and to all structures within the organization.
When quality improvement techniques are applied to an organization, both as a whole and to its constituent structures, substantial rewards can be obtained. These rewards include growth in market share, a reduction in costs, an improved image amongst consumers, and an increase in operational efficiency. The end result is a substantial competitive advantage.
Although the goal of improving an organization's quality or business potential is recognized as being important, efforts to achieve this goal have met with varying amounts of success. One of the reasons for a lack of success is that no systematic approach has been presented for initiating and maintaining a quality improvement effort within an organization. In most efforts to improve quality, only one set of processes (usually those related to manufacturing) is focused on, with the other processes only later receiving attention. This reduces the benefits which quality improvement efforts can provide when an organization is viewed as an entire system or process.
G. Pall in "Quality Process Management", published by Prentice-Hall (1987), H. Harrington in "BUSINESS PROCESS IMPROVEMENT: The Breakthrough Strategy for Total Quality, Productivity, and Competitiveness", published by McGraw-Hill, Inc. (1991), and R. F. Boedecker in "Eleven Conditions for Excellence: The IBM Total Quality Improvement Process", published by American Institute of Management (1991) discuss an example of a more restricted approach to quality improvement. The quality improvement efforts in these books are predicated on the assumption that managers have previously identified the macro processes within an organization. A macro process is a high-level process and one that may be composed of multiple sub-processes, but is not a sub-process of any other process, except for that of the organization when it is viewed as a single process. The approach described in the cited references concentrates on providing managers with techniques for improving quality within the previously identified processes and sub-processes. However, this does not provide a solution to the threshold problem, that of identifying the macro processes, and in particular, identifying those macro processes which impact the quality or performance measures which determine a customer's perception of the organization. These macro processes must be identified, and their function and effect on the organization understood, in order to efficiently allocate resources to those processes which will have the greatest impact on a customer's perception of the organization. If this impact is increased in a positive sense, then a customer will be more inclined to continue doing business with the organization. This will lead to an increase in sales volume, customer satisfaction, market share, and profits.
A similar view to that presented in the above references is discussed in "Getting things done: How to make a team work", by M. Hardaker and B. K. Ward, Harvard Business Review, vol. 65, No. 6, November-December 1987, p.112. The authors discuss how Process Quality Management techniques can be used to focus a team of employees on their collective mission within the organization. One stage of the technique involves listing the business activities or processes which the organization undertakes. However, as with the other references mentioned, no method is suggested for identifying those processes so that quality improvement efforts can be properly directed.
What is lacking is a method of providing the managers of an organization with the perspective needed to implement total quality control in a manner which has the greatest impact on a customer's perception of the organization. Such a perspective would include an understanding of all of the important processes which occur within the organization, along with the required inputs and outputs for each process. This would enable an organization's managers to understand how the processes are interrelated, and how limited resources may best be allocated to positively affect the functioning of the organization, by having the greatest impact on customer identified performance measures. After the macro processes have been identified, specific process improvement techniques can be applied to improve the quality of the processes and the organization as a whole.
Studies have shown that most organizations adopt a hit-or-miss method of determining how to allocate resources to improve customers' perceptions of the organization. Organizations that make incorrect decisions almost always do so because they utilize management's perspective as the framework for evaluating possible courses of action. This is particularly true for management decisions which relate to the allocation of organizational resources.
Thus, organizations need to be able to take the customer's perspective into account when making decisions, especially when allocating organizational resources. However, to do so requires a reorientation of management's perspective of the organization's activities (the organization's processes). An organization can be more successful by using its limited resources to systematically improve those activities that will produce the greatest benefit from the customers' point of view, where these benefits are typically evaluated by the customer in terms of performance or quality measures. This will result in an improvement in the customer-perceived quality of the organization, and will enable the organization to reap the benefits (increased market share, profits, etc.) which flow from the quality improvement.
However, the study of successful organizations (e.g., via selection of finalists and winners of the Malcolm Baldrige National Quality Award) has led to the realization that organizations cannot easily define quality as it is perceived by customers. The successful organization can only discover how its customers define and measure quality. Successful organizations are those which identify, define, and manage (allocate resources to) their processes according to the customer's perspective of what is important, not management's perspective. The organizations who err do so because the organization's management assumes it knows what is important to its customers. Consequently, they frequently focus on measurements of activities that have minimal impact upon the customer's positive perceptions of the organization.
What is desired is an apparatus and method for allocating an organization's resources so as to optimize the impact of those resources on the quality of the organization as it is viewed from a customer's perspective. This will improve those aspects of the organization (e.g., profits, sales volume, etc.) which are correlated with customer measures of the performance or quality of the organization.